Telus 2011 Annual Report Download - page 42

38 . TELUS 2011 ANNUAL REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS
Caution regarding forward-looking statements
This document contains forward-looking statements about expected future
events and financial and operating performance of TELUS Corporation
(TELUS or the Company, and where the context of the narrative permits,
or requires, its subsidiaries). By their nature, forward-looking statements
are subject to inherent risks and uncertainties, and require the Company to
make assumptions. There is significant risk that assumptions, predictions
and other forward-looking statements will not prove to be accurate. Readers
are cautioned not to place undue reliance on forward-looking statements
as a number of factors could cause future performance, con ditions, actions
or events to differ materially from the targets, expectations, estimates or
intentions expressed. Except as required by law, the Company disclaims
any intention or obligation to update or revise any forward-looking state-
ments, and reserves the right to change, at any time at its sole discretion,
its current practice of updating annual targets and guidance. Annual
targets for 2012 and related assumptions are described in Sections 1.4
and 1. 5 . Factors that could cause actual performance to differ materially
include, but are not limited to:
.Competition including: continued intense competitive rivalry across
all services among incumbent telecommunications companies, new
entrant wireless operators, cable-TV providers, other communications
companies and emerging over-the-top (OTT) services; active price
and brand competition; TELUS’ ability to offer an enhanced customer
service experience; industry growth rates including wireless penetration
gain; network access line losses; subscriber additions and subscriber
retention experience for wireless, TELUS TV® and Optik High SpeedTM
Internet services; costs of subscriber acquisition and retention; pres-
sures on wireless average revenue per subscriber unit per month (ARPU)
such as through flat rate pricing trends for voice and data, inclusive
long distance plans for voice, and increasing availability of Wi-Fi
networks for data; levels of smartphone sales and associated subsidy
levels; and ability to obtain and offer data content across multiple
devices on wireless and TV platforms.
.Technological substitution including: reduced utilization and
increased commoditization of traditional wireline voice local and long
distance services; increasing numbers of households that have only
wireless telephone services; continuation and acceleration of wireless
voice ARPU declines such as through substitution to messaging
and OTT applications such as Skype; and OTT IP services that may
cannibalize TV and entertainment services.
.Technology including: subscriber demand for data that could challenge
wireless network capacity, service levels and spectrum capacity; reli ance
on systems and information technology; broadband and wireless technol-
ogy options and roll-out plans, including reliance on wireless reciprocal
network access agreements; choice of suppliers and suppliers’ ability
to maintain and service their product lines; wireless handset supplier
concentration and market power; expected tech nology and evolution
paths; expected benefits and performance of high-speed packet
access plus (HSPA+) dual-cell technology and transition to long-term
evolution (LTE) wireless technology; depen dence of rural LTE roll-out
strategy on ability to acquire spectrum in the 700 MHz band; successful
deployment and operation of new wireless networks and successful
introduction of new products (such as new LTE and tablet devices),
new services and supporting systems; network reliability and change
management; and successful upgrades of TELUS TV technology.
.Capital expenditure levels in 2012 and beyond due to the Company’s
wireless deployment strategy for future technologies including LTE,
wireline broadband initiatives, Internet data centre (IDC) initiatives, and
future Industry Canada wireless spec trum auctions, including auction
of spectrum in the 700 MHz and 2.5/2.6 GHz bands.
.Financing and debt requirements including ability to carry out
refinancing activities.
.Ability to sustain growth objectives to 2013 (including, over this
timeframe, dividend growth of circa 10% per annum and CEO goals
of generating low double-digit percentage annualized growth in
earnings per share and greater growth in free cash flow). The growth
objectives may be affected by factors such as regulatory and
government developments and decisions, competitive environment,
reasonable economic performance in Canada, and capital expenditure
and spectrum auction requirements. The growth objectives are
not necessarily indicative of earnings, dividends and free cash flow
beyond 2013.
.Regulatory approvals and developments including: the design and
impact of future spectrum auctions (including the spectrum auction
rules and cost of acquiring spectrum in the 700 MHz and 2.5/2.6 GHz
bands); whether application and enforcement of new regulatory safe-
guards regarding vertical integration by competitors into broadcast
content ownership prove to be effective; increased foreign control of
wireless entrants pending federal policy decisions on foreign owner-
ship restrictions; interpretation and application of tower sharing and
roaming rules; and possible adoption of consumer protection legislation
by provinces whose non-harmonized rules create risk of significant
compliance costs.
.Human resource developments including employee retention and
engagement matters and the outcome of collective bargaining for
a Quebec region agreement that expired at the end of 2011 (covering
approximately 510 employees).
.Ability to successfully implement cost reduction initiatives and
realize expected savings net of restructuring costs, such as
from business integrations, business process outsourcing, internal
offshoring and reorganizations, without losing customer service
focus or negatively impacting client care.
.Process risks including: reliance on legacy systems and ability
to implement and support new products and services; and
implementation of large enterprise deals that may be adversely
impacted by available resources and degree of co-operation
from other service providers.
.Tax matters including possible increases in certain provincial and/or
federal corporate income tax rates.
.Business continuity events including human-caused threats such
as electronic attacks, and natural disaster threats.
.Acquisitions or divestitures including realizing expected strategic
benefits.
.Health, safety and environmental developments; Litigation and
legal
matters; and other risk factors discussed herein and listed
from time to time in TELUS’ reports and public disclosure documents
including its
annual report, annual information form, and other filings
with securities commissions in Canada (on SEDAR at sedar.com)
and in its filings in the United States, including Form 40-F (on EDGAR
at sec.gov). For further information, see Section 10: Risks and risk
management in Management’s discussion and analysis (MD&A).
.Economic growth and fluctuations including: the strength and per-
sistence of the economic recovery in Canada that may be influenced
by international economic developments in the U.S., Europe, Asia
and elsewhere; future interest rates; and pension investment returns
and funding.